The initial 1965 Medicare program offered health insurance to older adults, primarily to protect retirees no longer eligible for employment-sponsored medical insurance plans. The focus at that time was the high cost of hospital inpatient care, giving rise to Medicare Part A (hospital insurance).
The Medicare program automatically enrolled eligible beneficiaries in Part A, offering Part B (medical insurance) as optional coverage for outpatient services like doctor visits. In 1997, Part C, later named Medicare Advantage, emerged as the Medicare managed-care model, integrating Part A and Part B with preferred provider networks. In 2003, the government added another insurance component, Part D, to help with prescription drug costs. Part D is optional coverage, but most people choose to enroll when they’re first eligible to avoid late enrollment penalties.
Although the government expanded Medicare eligibility to include beneficiaries younger than 65 who meet certain criteria, the program excludes some benefits and costs.
Benefits Medicare does not cover
Original Medicare does not cover routine vision care, corrective lenses, hearing services, hearing devices, or long-term care. Benefits also do not include coverage for cosmetic procedures, massage therapy or annual physical exams. The program does not cover routine dental care, though you may qualify for limited dental services related to specific medical treatments, such as pre-surgical dental procedures. Original Medicare covers only services and supplies that are deemed medically necessary. For most of those covered services or supplies, you share the cost.
Costs Medicare does not cover
Part A and Part B each have a deductible. Additionally, if you are in the hospital for over 60 days, the hospital will charge you the Part A copayment for each day until your benefits run out, after which you pay all costs. A coinsurance of 20% after the deductible applies to most Part B benefits. Medicare does not cap out-of-pocket (OOP) expenses under Part A or B. A mandatory OOP maximum for Part D is new for 2024 as a provision of the Inflation Reduction Act. Part B and Part D also have monthly premiums that are generally required to be kept current for your benefits to remain active.
How Medigap can help
Because of the gaps in Part A and Part B coverage, some beneficiaries choose to purchase a Medicare Supplement plan (Medigap) to supplement their Original Medicare coverage. Medigap plans are offered by private insurance companies.
Many people purchase a Medigap policy to lower your OOP medical expenses with Original Medicare. The premiums, which vary by insurer and location, reflect the level of benefits included. Coverage may include deductibles, coinsurance, copayments and other payment gaps.
If a hospital needs to buy blood for you, Medicare does not cover the cost of the first three units. Medicare Supplement plans cover all or part of that gap. Medicare does not typically cover healthcare you receive while traveling outside U.S. borders. Some Medigap plans cover part of healthcare emergency costs incurred while traveling.
Medicare Advantage (Part C)
Some Medicare recipients choose to enroll in a Medicare Advantage (MA) plan as an alternative to Original Medicare. Your enrollment in Original Medicare continues, but your MA membership drives your Part A and Part B OOP expenses. MA plans cover the same benefits as the Original Medicare program, but deductibles, coinsurance and copayments may vary.
The government allows MA plans to offer you benefits Medicare does not cover. MA benefits may include gym memberships, routine dental care, hearing services, vision care and devices related to these services. Medicare excludes nonprescription drugs from Part D, but MA can offer an over-the-counter programs for products like pain relievers, first aid items, and vitamins. Medicare Advantage plans can vary, so it’s best to compare plans available in your area before enrolling.
Preparing for out-of-pocket costs
If you are concerned about out of pocket expenses, find a qualified, licensed insurance agent to help you find the plan that meets your needs. If you’re eligible for Medicare and Medicaid or have low income and resources that may qualify you for help, you may be able to lower your out of pocket costs. Ask about eligibility criteria for special Medicare programs designed to reduce medical expenses.